TSX Futures Gain Ground After US-China Extension of Trade Truce by 90 Days

Canadian stock market futures gained ground today after the United States and China extended their trade truce, as reported by Reuters. TSX’s future contracts climbed higher as investors welcomed news that the world’s two largest economies would continue their tariff pause.

Trade Deal Extension Brings Relief

China’s commerce ministry confirmed on Tuesday it would extend a truce on tariffs with the U.S. for another 90 days, following Washington’s similar announcement. This development helped push TSX’s futures up due to US and China truce as investors celebrated reduced trade tensions.

The extension comes at a critical time. Markets had been nervous about the August deadline when the previous tariff pause was set to expire. Without this extension, both countries would have resumed imposing higher tariffs on each other’s goods.

Commodity prices also supported TSX rise significantly, given Canada’s resource-heavy economy. Futures tracking Canada’s main stock index climbed on Tuesday as commodity prices firmed following the U.S. and China trade truce.

The positive news helped boost several key sectors. Energy and mining companies typically perform well when global trade tensions ease. These sectors make up a large portion of the Toronto Stock Exchange.

Energy and Metal Markets Respond Positively

The boost in Oil and copper also resulted in TSX’s futures as both commodities saw price increases following the trade announcement. Energy stocks often lead Canadian market gains when oil prices rise. Similarly, mining companies benefit from higher copper and other metal prices.

China is a major buyer of Canadian commodities. When trade relations improve between the US and China, it often creates a better environment for global commodity demand. This indirect benefit helps Canadian resource companies.

While celebrating the trade news, markets await U.S. inflation data that could influence Federal Reserve policy decisions. Attention turned to the much-awaited U.S. inflation data for insight into the Federal Reserve’s rate-cut trajectory.

The inflation numbers could impact interest rate expectations. Lower rates typically support stock market gains, while higher rates can create blockages for equities.

Market Performance Details

TSX’s future contracts showed solid gains in early trading. Futures on the S&P/TSX index rose 0.24% by 05 34 a.m. ET, reflecting investor confidence in the trade development.

The gains came after several days of uncertainty about whether the truce would continue. Markets had been pricing in potential trade disruptions before the extension announcement.

The 90-day extension gives negotiators time to work on longer-term solutions. However, investors will continue watching for any signs that talks might break down again. Future market movements will likely depend on progress in these ongoing discussions and other economic indicators like the upcoming inflation data.